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Did You Know? Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 tax-free cash.
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Our Most Commonly Asked Questions
A reverse mortgage1 could be a great way to help you live your later life to the full.
By borrowing a tax-free lump sum2 you could be able to fund home improvements, help younger family members get on the property ladder, or simply maintain your lifestyle in retirement.
How much you can borrow depends on a number of factors, including your age, the type of asset you own, and its value.
When comparing the reverse mortgage market, a specialist adviser3 will explain:
- You have to get advice before releasing equity.
- Check for plans that have a no negative equity4 guarantee, so you’ll never owe more than your house’s value.
- It reduces the value of your estate.
- The initial consultation is free with no obligation.
- The most known form of equity release is a lifetime mortgage, which is a loan secured against your home. Note that you will still own your home.
A reverse mortgage is a way of releasing the wealth tied up in your house without the need to move.
With reverse mortgage products, if you are over the age of 55, you can either borrow against the value of your home or retail all or part of it for an income every month, a lump sum, or the facility to get at equity as and when you like or a combination of these choices.
Although there are many different policy available, they can all be split into four main categories of reverse mortgage schemes.
Lifetime Mortgage Loan
You release a lump sum from the value of your asset, by taking out a mortgage secured (provided it’s your main residence) whilst maintaining 100% ownership of your home. This amount, plus any interest accrued, (you can opt to make repayments) is repaid from the sale when you pass away or move into long-term care.
Drawdown Lifetime Mortgage
This works similar to Lifetime Mortgage but with a regular fund reserve/draw down options allowing you to withdraw amounts at a frequency you select up to a specified amount of years, or until the reserve funds has been used up.
Interest-Only Lifetime Mortgage
You get a lump sum and pay interest on the loan every month, which can be fixed or variable, rather than allowing the interest to roll up. The amount you originally borrowed is normally settled when your home is eventually purchased.
Home Reversion Plan
Here, you retail some or all of your realty asset to a home reversion provider in exchange for a lump sum of money or regular payments, whilst maintaining the right to remain living in your home, rent free, for as long as you live, but you have to agree to maintain and insure it. At the end of it your house is sold and the sale proceeds are shared according to the remaining proportions of ownership.
You are free to use the money on almost anything you choose. There are many reasons for releasing equity from your home and here are a few of them.
Common Reverse Mortgage Uses:
- To supplement your pension income to cover living expenses
- To settle a repayment mortgage or clear the balance on an interest-only mortgage
- To improve your standard of living
- To see your family enjoy their inheritance while you’re still here
- To carry out some home improvements
- To take that holiday of a lifetime
- To help your children onto the asset ladder
- To pay off other outstanding debt and lower your monthly outgoings.
Reverse mortgage is not right for everyone and it’s important that you fully consider your choices and receive independent financial advice before making a decision. It’s also vital that, if you do decide to use an equity release product, you choose one that meets your needs.
Remember that taking a reverse mortgage is generally a long term option. However, there are flexible programs available that may fit your varying needs and some will allow you to repay in the future without any penalties. A financial adviser can help you to pick what is right for you.
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